TCS Daily

Immigration: A Better Way

By Arnold Kling - December 1, 2003 12:00 AM

"I have met wealthy elites, academics and journalists from Mexico City who privately laugh that they are exporting their Indians and Mestizos, their unwanted, into the United States. Their smile disappears when I reply that we instead figure what they suppose to be riffraff are the real cream of Mexican society...who in fact are superior people to those who oppress them at home."
-- Victor Davis Hanson, Mexifornia, p. 31


Hanson's book is passionate, hot-headed, disjointed, and self-contradictory -- much like our immigration policy. In this essay, I do not propose a way to make immigration policy perfect. However, I have some suggestions to make it better.


Minimum Requirements


I have two issues on which I feel strongly. One is that this country must continue to be a haven for the oppressed. The other is that we should not rely on unenforceable laws.


My ancestors were driven from Europe by ethnic violence. Today, there is ethnic violence in Africa and elsewhere. If victims in those countries can escape, and they choose to come to America to make a new life, then I feel that they should have such an opportunity.


People who come to this country to escape oppression should desire assimilation. They should embrace our language, our values, and our democratic principles. We should not go out of the way to make it easy to speak a foreign language in the United States, or to remain in a separate culture within the United States. People should be sufficiently grateful to be living here that they adapt to our ways. In the process, the United States can absorb elements of other cultures, without breaking into separate tribes.


My other big issue is to get rid of what I have called legamorons, meaning any law that could not stand up under widespread enforcement. As it stands, our immigration laws are not going to be enforced. Keeping them on the books is hypocritical and only serves to keep us in a state of denial and evasion over the fact that we need to re-think immigration policy.


Guest Workers


The immigrants that I want in this country are people who would be tortured or killed if they remained in their native lands. Simply wanting to improve your economic opportunities does not entitle you to become a U.S. citizen, in my way of thinking.


However, there is nothing wrong with someone wanting to improve their economic lot in life. I think that we can accommodate guest workers on a win-win basis.


What I propose is that we have a guest worker program with the following characteristics.


1) Anyone who is not a terror suspect or criminal is eligible.


2) All guest workers must register with a private employment agency. That employment agency must provide health care coverage and ensure that all necessary regulations are followed and taxes are paid. Private employment agencies that engage in tax evasion or other regulatory violations will be prosecuted.


3) Taxes will include a payroll tax of about 20 to 25 percent, which will be collected by the employment agency and remitted to the government. This will cover contributions to the Social Security and Medicare trust funds (even though guest workers will not be eligible for benefits under those programs), as well as cost of providing government services at the Federal, State, and Local levels.


4) Families of guest workers will not be eligible for health care or education, unless they purchase insurance coverage for the former or tuition for the latter.


5) Households and businesses must hire workers who are either U.S. citizens or legal guest workers, meaning that they are registered with private employment agencies. Hiring a non-citizen "under the table" will be a violation of the law.


The key to the guest worker proposal is the last point. If the households and businesses that hire illegal immigrants do so in order to save the cost of paying taxes, and they will not pay the taxes even when an employment agency handles all of the paperwork for them, then what we have is more than an immigration problem -- we have a tax rebellion. It may take some education and persuasion to overcome this tax rebellion, but we need to face that issue if we are going to have a sensible immigration policy.


A formal guest worker program would have two effects on the cost of a foreigner working in the United States. Those costs would be increased by the taxes collected and the fees paid to employment agencies. Other costs would go down. These would include the cost of evading border patrols to enter the country, the cost of living underground, and the cost of having only a limited set of employers willing to hire illegal immigrants.


Tariffs vs. Quotas


In economic terms, replacing a law against foreign workers with a guest worker program in which guest workers are taxed is the equivalent of replacing a quota with a tariff. A quota system restricts supply by putting up regulatory barriers. A tariff system restricts supply by raising the price. Tariffs are generally more efficient than quotas.


Just as laws against recreational drugs create business opportunities for criminal enterprises, laws against immigrant workers create business opportunities for criminals who traffic in illegal workers. They also create profit opportunities for households and businesses willing to exploit the foreign workers. Quotas always create such narrow groups of beneficiaries.


For citizens competing against illegal immigrants for jobs, the playing field might be more level with a tariff (guest workers paying taxes) than with a quota (laws that deter some foreign workers but not all). Today, citizens subsidize immigrant workers by paying taxes for government services that benefit the immigrant. With a guest worker program, immigrant workers would pay their fair share.


The tax rate for guest workers would provide a means with which to fine tune the competition between domestic and foreign workers. If we believe that foreign workers are driving domestic wages too low, we can raise the tax on foreign workers. On the other hand, if the economy is at full employment and we want continued expansion without inflationary pressure, we could lower the tax on foreign workers.


The Enemy of the Good


There is a saying that "the best is the enemy of the good." The truth in that saying is that people will let a problem fester while fighting over what is the ideal solution.


A guest worker program with taxes is probably no one's ideal solution to the immigration issue. However, until the ideal solution lands in our laps, my contention is that it would make things better.


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